Southern Ornamental Iron Works v. Morrow

101 S.W.2d 336
CourtCourt of Appeals of Texas
DecidedJanuary 8, 1937
DocketNo. 13473
StatusPublished
Cited by27 cases

This text of 101 S.W.2d 336 (Southern Ornamental Iron Works v. Morrow) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Ornamental Iron Works v. Morrow, 101 S.W.2d 336 (Tex. Ct. App. 1937).

Opinion

SPEER, Justice.

This suit involves the principles found in what is known to our jurisprudence as “class suits,” and upon these issues the rights of the parties here must be determined.

On May 31, 1935, Wright 'Morrow, receiver and trustee for Lumbermen’s Reciprocal Association, instituted this suit in the Seventeenth district court of Tarrant county, Tex., against the Southern Ornamental Iron Works of Arlington, Tex., a private corporation, to recover a judgment for $1,429.23, with interest thereon from May 1, 1933, at the rate of & per cent, per annum, by reason of an assessment against the defendant ■ as a subscriber to, and policyholder in, Lumbermen’s Reciprocal Association during a time when it was alleged the association was insolvent.

The pleadings of the parties to this suit are very lengthy, and it would unnecessarily extend this opinion to give them in detail here. We shall refer only to those parts which we consider material to the points upon which we think the case should be decided.

Plaintiff alleged the organization of the Lumbermen’s Reciprocal Association under the provisions of chapter 20, title 78, Rev. Civ.St.1925 (article 5024 et seq.); and that prior to July 1, 1929, and from that date to July 31, 1930, the defendant was a member at said association; that as such member it had, by an instrument in. writing, named, constituted and ap[338]*338pointed Christie & Hobby, Inc., its true and lawful attorney in fact, with power to act in defendant’s place and stead, in all matters pertaining to the operation of the business of a reciprocal insurance association, especially in the issuance of contracts of exchange of indemnity insurance with other subscribers at said association.

It was further alleged that by the terms of said power of attorney defendant’s said agent should appear for it in any suit or legal action and to answer, prosecute, defend, or compromise the same and to do and perform any and all other things necessary for and on behalf of the defendant, as fully and completely as could the defendant, in relation to any contract of insurance of indemnity authorized by law to be made by said association; that defendant invested its said attorney in fact with full power of substitution.

It was averred that defendant and each of the other subscribers at Lumbermen’s Reciprocal Association entered into identically the same character of contracts and powers of attorney to the same attorney in fact, binding themselves severally to pay their respective pro rata parts of any deficits and losses sustained by said association in the operation of its business, provided, however, that no one subscriber should ever be required to pay by assessment for such deficits and losses a greater sum than an amount equal to one additional annual premium deposit on each'policy of insurance issued to them.

Plaintiff alleged that there were issued to defendant certain policies of insurance upon which the premiums earned during the period embraced between July 1, 1929, and July 31, 1930, amounted to $4,330.98. That the Lumbermen’s Reciprocal Association became insolvent and remained so between said July 1, 1929, and July 31, 1930. That a suit was instituted in the district court of Travis county, Tex., by the State of Texas against said Lumbermen’s Reciprocal Association asking for a receiver therefor, and on July 31, 1930, plaintiff was by said court appointed receiver for Lumbermen’s Reciprocal Association with instructions from said court to take charge of and marshal all assets belonging to said association. That plaintiff complied with said order and it was found that a large sum of money w.ould have to be raised by the receiver from the subscribers at said association under their respective contracts to cover the deficit of liabilities and expenses over and above the assets then in the receiver’s hands.

It was alleged there were about four thousand subscribers at Lumbermen’s Reciprocal Association, including the'defendant ; that it was impracticable and impossible for the receiver to sue and serve with process each and all of said subscribers in a suit for the purpose of making an assessment to raise sufficient funds to cover said deficit, and it became necessary to file a class suit in said district court of Travis county, Tex., where said receivership was then pending, against said subscribers; that he instituted said class suit “against the Trinity Portland Cement Company, a corporation, and twenty-seven other defendants, all being subscribers at the Lumbermen’s Reciprocal Association, during the period of time hereinabove mentioned (July 1, 1929 to July 31, 1930), and being fairly representative as a class of 'all the subscribers at the Lumbermen’s Reciprocal Association during the period mentioned; said defendants being sued individually and as named defendants and also as representative of all other subscribers at Lumbermen’s Reciprocal Association who were such subscribers during the period from July 1, 1929^ ,to July 31, 1930, said cause being No. 51867. * * * The suit was brought as a class suit in order to establish and fix the assessment liability of each and all subscribers at Lumbermen’s -Reciprocal Association who were subscribers and policyholders therein during the' period from July 1, 1929, to July 31, 1930.”

Averments were made by plaintiff that on May 1, 1933, a final judgment and decree of said court was entered, in which it was found that after allowing all credits for value of the assets in the hands of the receiver, there would still remain a deficit of unpaid liabilities of $625,- » 483 62, and that under and by virtue of the contracts of said subscribers they were liable to the receiver for their respective proportionate part thereof. That said judgment provided that the aggregate' of all premiums booked and earned by subscribers at Lumbermen’s Reciprocal Association during the period from July 1, 1929, to July 31, 1930, amounted to $1,-895,404.90, and that it required an assessment against the subscribers of 33 per [339]*339cent, of the amount of booked and earned premiums to make up said deficit of $625,-483.62. That by the terms of said judgment said assessment of 33 per cent, was made of the booked and earned premiums during the period mentioned against each subscriber at Lumbermen’s Reciprocal Association, and the plaintiff was authorized to collect the same.

Prayer was for judgment for $1,429.23 with interest as mentioned in the first part of this opinion. The principal amount sued for was alleged to be 33 per cent, of the amount of the booked and earned premiums on policies issued to defendant during the period from July 1, 1929, to July 31, 1930.

Defendant answered with a general demurrer and twenty-three special exceptions, along with general and special answers. The general demurrer and all special exceptions were by the court overruled, to which ruling it excepted and has assigned errors.

In the answer of defendant there were special averments denying under oath that any partnership existed between it and other subscribers at Lumbermen’s Reciprocal Association; that at the time it subscribed to said association, one Haliday, as a representative of Christie & Hobby, Inc., told defendant it would never be liable for an assessment and that on all policies an in-dorsement would be attached to that effect, and that defendant relied upon said statement as being true and but for such statement it would not have' subscribed at Lumbermen’s Reciprocal Association.

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Bluebook (online)
101 S.W.2d 336, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-ornamental-iron-works-v-morrow-texapp-1937.